All a-tremble

- Things are spinning out of
control, and I have locked myself inside the Mogambo Bunker Of
Raw Fear (MBORF), whimpering like the little crybaby I am. For
example, the damned Federal Reserve is still cranking out the
money and credit with both hands, which they figure is real clever,
I suppose, although a retarded monkey could do as much, and for
far less salary, and in its off-time it could entertain us by
roller skating on the table. But this is not about hilarious
monkeys wearing funny hats, but the damnable Federal Reserve,
and last week they created another $6.4 billion in credit. The
reason that I am all a-tremble is that all this money inflation
that they have been creating for decades is showing up as price
inflation, which is one damned good reason why gold is doing
so well.

As proof, I demur to the keen
eye of Mike in Dallas, who writes that an article in the Dallas
Morning News business section listed some price increases and
plans for them. Michelin, Goodrich, Uniroyal prices up 8%. Clorox
8%. Kleenex 5%. Cottonelle 6.5%. Glad bags 8%. He didn't mention
health care, but maybe everybody knows that already.

And let's not forget the Postal
Service, which increased the price of a first-class stamp to
39 cents, which is an increase of 5.4%.

And it is not just consumer
products that will be going up in price, but lots and lots of
things, especially in California, as we learn from the newsletter
View From Silicon Valley, which shows that the politicians in
California in general and Silicon Valley in particular are as
ignorant and stupid as the rest of their loathsome political
class of morons, and the have instituted the "millionaire
taxes", whereby "Anybody getting a seven-figure W-2
in 2005 will be required to pony up an extra 1% (so $10K+) earmarked
for 'mental health' in 2006'" and a new 1.7% tax for "universal
day care." Hahaha! Public-funded babysitters!

And there is, I am sorry to say, more, as the Valley Transit
Authority (VTA) wants another quarter-cent sales tax levy to
further "improve service," which is supposed to raise
$2B over 30 years, and another quarter-cent ($2 billion) for
something else, buses or something.

To make everything work out
on paper, the VTA somehow determined that there would be "5.8%
growth in sales tax revenue over the next ten years, instead
of the 4.8% previously estimated." Hahaha! That reminds
me of how ten years ago I estimated for my wife, neighbors and
children that I would be 10% less obnoxious in ten years, which
was, as it turned out, a big fat whopping lie, and am at least
10% MORE obnoxious! But ten years down the road these arrogant
fools think they can estimate revenue down to the fraction of
a percent? Hahahaha! And I though the Fed was arrogant!

As the Charleston Voice succinctly
notes, "Labor unrest has always been symptomatic of disintegrating
monetary systems." This naturally brings up the city of
San Jose, which "agreed to a 12.9% pay increase for police
over the next 24 months, on top of goosing pensions from 85%
to 90% of final pay. The firemen are angrily demanding the same
deal, and local nurses just won a pay increase (on top of hospital
staffing concessions) of $150M over two years." This settlement
of labor negotiations came at the end of, I note with a sneer
of contempt, 5 years of declining revenues. "We ain't got
the money, but you can have more, nevertheless!" Hahaha!
California! What idiots!

And it is going to get worse, as the jackass-in-Republican-clothing
governor of California is putting through another $50 billion
in bond issues for road improvements! If Shelby Moore is correct
when he says that we have seen a "war between austrian and
keynesian economics" and that the next war is a "war
between keynesian and socialist economics", then the socialists
are obviously winning.

Even worse, much worse, is that there is going to be a state-wide
increase in the minimum wage to $7.75. This puts total wages
up about "$2 billion per year." That workers need the
money, as wages have long lagged rises in prices, is damning
testimony of the abysmal incompetence of the Federal Reserve.

The summary says it all "Counting
new income taxes, new and increased parcel taxes, increased public
employee salary and pension costs, increased debt service, additional
sales taxes, increased minimum wages and utility costs, Silicon
Valley residents will see literally billions of new costs in
2006." All of which means higher prices for everything else.

- Bill Gross of PIMCO has posted
his latest essay, entitled "A
Gift That Should Keep On Giving." Naturally, I thought
he is talking about precious metals, pornography or a boatload
of bourbon, but he was not. Instead, he says that homeowners
with adjustable rate mortgages are going to be stressed. "As
the cost of the ARM increases with higher short rates, your excess
income available to spend on discretionary items begins to shrink.
If that ARM rate goes too high, you hunker down even more by
not eating out, going to movies, or taking a vacation to exotic
destinations. The economy, in other words, slows down."

Perhaps this explains the latest
news that Consumer Installment Debt went down, again, in November.
So people are suddenly spending less. This ought to knock the
hell out of VTA's estimate of how much revenue will grow! Hahaha!
And since they say that 70% of the economy is consumer spending,
then there are a LOT of other estimates of revenue that are getting
the hell knocked out of them, too!

And I am telling you that increased
costs mean increased prices. Or, as David Collum so pithily put
it, "One man's wage increase is another man's price increase."
And so all of this awarding higher wages will all be for naught,
as prices will increase high enough to more than erase any and
all gains for those workers.

And who is paying these higher
prices? Me, for one. But Bill Bonner of DailyReckoning.com doesn't
want to talk about how I mismanage money and am always broke
mostly because I am a big stupid chump, but says instead that
I should be cheered that I am not alone, and that "At the
middle and lower ends of the economic food chain, people are
having a hard time making ends meet." And there are lots
and lots of these people at "the middle and lower ends of
the economic food chain" who don't have any money or job
or hope of ever having either of them, and you can bet that they
are going to get really, really angry. Rioting, stealing, robbing
and killing angry.

With a cry in my voice, I note
that it is not just California, either. From Reuters we read
that "U.S. municipal bond issuance set a record in 2005,
soaring to $405 billion despite rising interest rates. This was
more than 13 percent higher than in 2004, when sales totaled
$357.1 billion. Last year's debt sales by states, counties, cities
and towns topped the record of $379.3 billion set in 2003."
What we did NOT read is that this $405 billion of NEW debt is
almost 4% of the entire Gross Domestic Product of the USA! So
you can bet that your state and local taxes are going to go up,
and up, and up for the rest of your freaking life to pay for
all of this.

- If you want something else
to worry about, George Ure of UrbanSurvival.com writes that (putting
words into his mouth) even the Earth itself is rebelling at the
degree of insanity, and that an earthquake that registered 7.1
on the Richter scale "was significant for more than its
size. Notice its depth - 579 kilometers deep. That's a concern
because when things shake and break down at that level you could
be looking at the crust decoupling from the mantle."

- Among the many things that
I am confused about is the inflation/deflation debate. Which
will it be? Deflation is when the money supply gets smaller,
and your money, so the theory goes, becomes more valuable as
the money supply contracts. Okay, I will admit that the deflation
thing will actually happen, if only because it is ridiculous
to think that debt loads can grow to the moon. But my money becoming
more valuable and going up in buying power? Hahaha! I am laughing
so hard that my stomach hurts! Hahaha! But perhaps I could be
persuaded if I could be given an example, just one measly example
of a country's currency going UP in value when its economy implodes
from massive debt loads, consumer stupidity and the overarching
stupidity of a gigantic government-centered economy, all utilizing
a fiat currency. Just one!

Here is another deflationist
debate: "We have had a global asset bubble in real estate,
stocks and some commodities. That bubble will have begun to pop
in earnest by the end of '06 and will engender global economic
contraction and overcapacity resulting in falling wages and prices,
falling interest rates, falling stock prices, and quite probably
a falling dollar." Falling wages? Whose? You never heard
of the minimum wage? And as for falling prices, hell, their own
argument is that the dollar will fall, which will make import
prices go up, and as we import most of everything we consume,
where in the hell are the falling prices coming from? Well, housing,
maybe. And stock prices. And bond prices.

And as for falling interest
rates, the mighty laugh of The Mogambo (MLOTM) shakes the windows
and I snort in derision. America is being bankrupted and ruined
because we act stupidly, and now foreign lenders are going to
keep loaning us money and accepting a lower interest rate (implying
reduced risk) from certifiable morons? Hahahaha!

And you don't have to take
it from me, mostly because nobody in their right mind listens
to me anyway, especially when you can listen to the Texas Hedge
Report, which writes
that "We think 2006 will be the year that the average investor
wakes up to the U.S. Dollar's vulnerability and begins to use
gold & silver as a way to protect his savings. The
Euro & Yen have proven their fallibilities as hedges. Gold
is now available to be purchased through two ETFs (tickers: GLD
& IAU) with silver about to join."

Martin Weiss of the Money and
Markets newsletter agrees that "Foreign central banks aren't
under any obligation to continue holding a particular percentage
of their reserves in dollars. In fact, two major players are
already starting to diversify out of dollars: Russia and China.
Guess what they're buying: GOLD! And China has already announced
it will boost its gold reserves by putting 2.5% of its trade
surplus in gold - every year."

Now, I figure that 2.5% doesn't
sound like a lot, and sure enough Mr. Weiss goes on to say "A
2.5% allocation may not sound like much." See? I told you!
"But based on China's trade surplus last year, you're talking
an estimated $2.5 billion going into gold this year alone. Since
the physical gold market is tiny, $2.5 billion is more than enough
to keep gold moving higher." How much higher? "Gold
should easily soar to my next two targets of $618 and $740 an
ounce" he quickly replies.

Now, all of this is just current
events, but he sees central banks around the world "pulling
out of the dollar en masse in 2006." I innocently ask, "Are
you sure?" And he says "I expect they will." There
was an awkward silence, and I know that he was waiting for me
to ask a follow-up question, but being a real stupid guy, I just
sit there like a stump. Exasperated, he finally blurts out "It
will spell disaster for the greenback, setting off a financial
crisis in the U.S. the likes of which has not been seen in decades."
Now, if it was me, the word "disaster" would have made
me end that sentence with an exclamation point! Like that one!

- Richard M. tried to go out
again to buy more platinum, but "Once again, they had none!"
But he says that "The sales lady told me they are still
doing big business in selling actual hard assets", which
explains the shortage of platinum, and that palladium maple leafs
"are also quite popular among the local hoi polloi."

- If you want to talk about
oil, then Toni Straka of the Prudent Investor newsletter notes
that the world uses oil so fast that the globe has "a daily
bill of roughly $5.5 billion for crude oil" at current prices.

Perhaps this huge use of dollars
is what has everyone worried about the new Iran oil bourse (trading
center) that is scheduled to crank up in March, and probably
rightfully so. Instead of an American-controlled oil market and
American friends and insiders getting rich making their slimy
little backroom deals, now it will be an Iran-controlled oil
market and Iranian friends and Iranian insiders making their
little deals.

It's all mox nix to me, as
oil is going to rise mightily in price anyway, but all of those
American oil-business scumbags have families to care for, bills
to pay and these big, fancy cars that speed by me as I sit with
my "Will work for food" sign around my neck, and so
you can bet that they are all crapping in their pants at the
thought of the end of a very long, very cozy and very profitable
deal. Ergo, you can certainly make a case that George Bush and
the Congress will okay a plan to invade Iran and take over the
place, because that is the kind of treacherous, thieving, murdering
scumbag that my beloved America has become in its increasing
desperation.

Muckraker Report, which is
from the Libertarian Party in Berkeley goes farther than merely
hypothesizing, and predicts how it will actually play out. Firstly,
the government "must portray the Iranian President, Mahmoud
Ahmadinejad, as a threat to the region and the world. Finally,
once naive American people are convinced the 'weapons of mass
destruction' that were to be found in Iraq are actually in Iran,
coupled with the almost daily media coverage of Iran's nuclear
power / weapons program aspirations, and what we will soon have
on our hands is another fabricated war that will result in tens
of thousands of civilian lives being lost, all because the political
elected pawns in Washington DC lack the discipline to return
our currency to a gold or silver standard, end the relationship
with the foreign banking cartel called the Federal Reserve, and
limit the activities of the U.S. government to those articulated
in Article I Section 8 of the Constitution for the United States
of America."

Wow! Nice going! I am impressed
that they understand how money becomes money because of bank-created
credit, so that someone could borrow some money, and then someone
borrows the money from a bank, which turned the credit into money,
and thus money = debt. But they get zero points when they say
"If all debt were to be paid, there would be exactly zero
U.S. dollars in circulation because it will have all been returned
to the vaults of the Federal Reserve. This might seem hard to
fathom, but it is the gospel of fiat money." Wrong-o. Actual
cash can come into existence and not be part of any debt. All
the government has to do is print up actual cash, and then use
it to pay somebody for some goods or services. For example, if
I finally get my dream job cleaning the toilets of the Treasury
building (which is a much better job than the one I have now)
and they pay me in cash, then money CAN come into existence without
a corresponding debt. Not much. But some!

- Richard Maybury in his newsletter
Early Warning Report notes that "81% of all the world's
oil deposits" are in areas (which he calls "Chaostan")
that are always kicking up sand with each other, and that his
best guess is that "the Third World War and the war economy
will last at least two more decades." He recommends that
you load up on oil, gold, silver, platinum, defense industries,
commodities and US rural real estate.

Along the same lines, Gary
North of DailyReckoning.com writes "Six months ago, an analyst
group made up of former top-level U.S. government officials calculated
a global oil scenario. In this extremely likely scenario, just
3 minor disruptions in the already-strained world oil supply
chain cause $150-a-barrel crude prices, a $5.32 pump price for
gas, more than 2 million jobs lost, and a 28% drop in the S&P
500."

Well, if oil is going to get
more expensive, what about natural gas? Les H. writes that a
guy named Dr. Jean LaHerrere has models that "suggest that
in about 4 years the supply of natural gas will be about 1/3
to 1/4 of today's supply." Another guy named Matt Simmons
"has done extensive analysis of similar data and expects
a severe drop in natgas supply soon." As an aside, we learn
that "The Peak Oilers refer to this coming crisis as the
'natural gas cliff event.' "

Speaking of oil, Les H writes
to say that "Dr. Colin Campbell has a Ph.D. in geology from
Cambridge U points out that we now know the origin of oil. Ain't
from dead dinosaurs. There were two very warm periods in the
planet's history, one 140 million years ago and one 90 million
years in which "huge marine algal mats grew and settled
to the bottom of the ocean. Now, to make oil from dead algae,
the algae must spend some time at least 7500 ft below sea level,
but no more than 15,000 feet below sea level, to turn the residue
into oil. Too deep, and it becomes natgas. Two shallow, and it
is only oil shale."

Les steps in and extrapolates
by saying, "But one thingee is for darn sure: one has to
discover a natgas field before it can be produced, and the rate
of discovery is falling rapidly. We now are fully utilizing every
rotary rig in the US to try to find more fields. And for the
last two years running, US natgas production has fallen about
4% per year. Dr. LaHerrere's analysis suggests that soon we will
see a much more rapid decline."

And the problem ain't a-gonna
get solved by more exploration and drilling, as Dr. Ken Deffeyes,
professor emeritus of sedimentary geology at Princeton University,
writes that "we have now found 94% of all the oil fields
that have ever existed on the planet."

- John Mauldin "In 2005
the United States is projected to run a trade deficit of $806
billion, up from $668 billion in 2004. The International Monetary
fund forecasts that the trade deficit will rise to $890 billion
in 2006 and then to what can only be called a staggering $980
billion in 2007.How in the wide, wide world of global trading
can one country run an almost $1 trillion dollar trade deficit?
What is the rest of the world going to do with all those dollars?"

Well, they could send them
to me, but every time I suggest it, they hand up the phone on
me. But Mr. Mauldin doesn't even slow down as he goes on to comment
on Greenspan's big speech last year at Jackson Hole, where he
actually admits that the central bank "will need to deal
in greater detail with balance sheet considerations than was
the case in the earlier decades of the postwar period."
I know what you are thinking. You are saying to yourself, "What
in the hell is this crap? The nation's monetary policy is being
used to bail out some butthead companies who have acted irresponsibly?"
In a word, yes.

Mr. Mauldin went on to quote
Mr. Greenspan saying "The determination of global economic
activity in recent years has been influenced importantly by capital
gains on various types of assets, and the liabilities that finance
them." This is the only instance that I know of where anyone
connected with the Federal Reserve, or the laughable and mutant
"mainstream" economics that has infested the USA, has
ever suggested, or ever even hinted that the liabilities that
have arisen in all this financial activity have any importance
at all! In fact, the bizarre economic theory that the Fed operates
under actually takes no notice of existing debt loads. Strange,
but true. All that matters to them is interest rates, and everything
economic is determined only by interest rates. This probably
explains why the ratio of total liabilities to GDP is now somewhere
between 250% and 350% of GDP, which is a record never even attempted
anywhere else in history.

But instead of admitting that
The Mogambo was correct when he is standing outside the windows
of the Federal Reserve building and screaming, over and over,
louder and louder, that "We are freaking doomed by all of
this accumulated debt!", Greenspan actually confesses that
the actions of the Federal Reserve will NOT change, and he actually
says "Our forecasts and hence policy are becoming increasingly
driven by asset price changes."

- John P notes that just three
costs faced by every American that probably determine 80+% of
the true RATE OF INCREASE in the cost of living:

1. lodging, 2. health care, and 3. energy.

Looking at these things, he
figures that the inflation rate "is at least 16% and actually
north of 20%", which sounds about right to me. That is why
I am accumulating gold and expect you to, too.

And when speaking about gold,
listen to Richard Russell, of the Dow Theory Letters, who writes
"All the gold ever collected, panned or mined since the
time of Jesus amounts to about 2 trillion dollars worth. The
Fed is now producing dollar liquidity at the rate of roughly
$1.5 trillion dollars a year. How high can gold go? I honestly
don't know, but compared with what the Fed's been doing over
the last five years, gold is cheaper than dirt. And investors
around the world are beginning to recognize that thesis. The
capitalization of all the legitimate producing gold mines on
the planet earth is around $120 billion. You could trade 'em
all for Google and have money left over. Now please get this
straight -- we don't buy gold to build wealth, we buy gold to
HAVE wealth. And that is why intelligent people buy and hoard
gold." I include this because I am buying gold, and this
is the only time in my life that anyone has ever said that I
have done something intelligent.

And the opposite of "intelligent"
is "stupid", and if there was ever a really, really,
really stupid idea (RRRSI) which is so stupid that nobody else
in history has ever even considered it, it is the RRRSI of "Let's
disarm ourselves and make ourselves completely defenseless!"
Well, it turns out that there are morons in Australia too, and
Ed C, who is a police officer in Australia, says that in the
twelve months since gun owners in Australia were forced by a
new law to surrender their firearms (a program which cost $500
million dollars), the results are that "homicides are up
3.2 percent, assaults are up 8.6 percent, and armed robberies
are up 44 percent! In the state of Victoria alone, homicides
with firearms are now up 300 percent. While figures over the
previous 25 years showed a steady decrease in armed robbery with
firearms, this has changed drastically upward in the past 12
months, since the criminals now are guaranteed that their prey
is unarmed. There has also been a dramatic increase in break-ins
and assaults of the elderly."

In case you were wondering, similar results are always achieved
anywhere people are deprived of the means to protect themselves.
That is why the famous John Lott correctly entitled his book
(as nearly as I can recall), "More Guns, Less Crime."

But we were talking about gold,
and Mark Lundeen, independent economist, has calculated that
the price of gold has pushed the commercial traders in the gold
pits massively underwater. As he puts it, "The gold commercials
are hurting. The only way to end this is for them to get gold
to go back down, or get net long. But to do so they would have
to buy back their positions and who knows what gold would do
then? I smell blood in the water."

Murphy of LeMetropole.com chimes
in with "The Gold Cartel has lost control. Physical market
demand is overpowering the bums - their diminishing central bank
supply is just not enough at these price levels. The Gold Cartel
and their allies know they are TRAPPED. The crooks and friends
know the downside is limited too and are trying to cover as fast
as they can. This is why we are seeing these dramatic price surges
to the upside."

Murphy goes on to say "the
shorts are panicking in order to extricate themselves from their
short positions. How are they doing? Not so good. By my calculations
all they covered yesterday was around 40 tonnes, max. The total
short position is above 10,000 tonnes. If only 10% of the minimum
number of shorts plan to cover, it will take another 25 days
like yesterday. 25 TRADING DAYS!"

I raise my hand and ask "And
what about silver?" Well, Mr. Murphy is visibly upset that
I interrupted him, but says through clenched teeth that he figures
that it is "Only a matter of time before there is a Commercial
Signal Failure in silver too. We will observe silver move $1
higher in a single trading session." And Ted Butler, silver
guru, predicts that we will soon see days this year when silver
"goes up-limit", although he acknowledges that this
is actually just a figure of speech, as there are actually no
up-limits on the Comex other than temporary halts to trading.

And speaking of gold, James
Turk author of newsletter The Freemarket Gold & Money Report
writes "Everyone who has bought gold over the past 24 years
is making money My expectation is that we're going to see $600
in the first quarter of 2006, and sometime over the course of
2006 we're going to touch that $850 level."

Then he gets into the shadowy
and scary new world of ETF's, and says "iShares Comex Gold
Trust (IAU ) and streetTracks Gold Shares (GLD ) are not an alternative
to owning physical metal. They're a convenient way to speculate
on the price of gold. They don't prove that the gold actually
exists in the vaults of the custodians and the sub-custodians
with an audit."

- I know that it is only a
slip of the lip, but President Bush may be more truthful than
he realizes when he said (thanks to 321Gold.com for the quote)
"Our enemies are innovative and resourceful, and so are
we. They never stop thinking about new ways to harm our country
and our people, and neither do we." Hahaha! And appointing
Ben Bernanke to the chairmanship of the Federal Reserve only
underscores those convictions! Hahaha!

- Puru Saxena of Money Matters
had headlined his latest newsletter "Red
Alert - Monetary Flood!" He writes "Despite what
you hear on your local T.V. or radio show, we are living in highly
inflationary times. How do I know? Easy - simply take a look
at the rates of money supply growth over the past year - Australia
+ 9.8%, Britain + 11.2%, Canada + 9.8%, Denmark + 16.3%, US +
7.3%, Euro zone + 8.5%." He concludes by noting that "Central
banks around the world continue to print money like there is
no tomorrow."

Bob Hoye of Institutional Advisorshears talking about central bank stupidity and says
"As history shows, central banking is fine when disciplined
by a convertible currency and, when not, it becomes a tool of
state ambition to confiscate wealth though currency depreciation.
That the dollar has lost 90% of its purchasing power in only
50 years exceeds most princely devaluations and, like those,
has been no accident. Regrettably, modern financial agencies
such as the Treasury or Federal Reserve System have become as
corruptible as their medieval counterparts.

"The total American debt
is roughly US$40trillion whereas the size of its economy is around
US$11 trillion. So, the debt to GDP ratio is over 350%! Similar
imbalances can be seen in most advanced countries where households
and governments are choking on debt. In the current scenario,
the easiest way for nations to make this debt easier to handle
is through inflation.

"We can be rest assured
that the central banks of this world will continue to inflate.
After all, the same method has been tried (without success) several
times before in history." As examples, he mentions France,
which plunged "France and Europe into a severe economic
crisis!" Germany also adopted the inflationary route after
the First World War and "decided to finance its war reparations
by printing money. This action had a catastrophic impact on the
German economy as its currency eventually became worthless due
to hyperinflation." Plus, there was "Latin America
in the early 1980's. Once again, the end result was the same
- economic chaos and plummeting currencies."

By this time I am bored as
I was in high school, listening to somebody yammer yammer yammer
about ancient history. What I want to know about is gold, and
how much money I am going to make. Graciously answering my question,
Mr. Saxena tells us that "supply is shrinking. On the other
hand, gold demand from India and (to a lesser extent) China is
going to the moon. Over the past year, the Indian gold demand
grew by 47% and India also happens to be the biggest consumer
of gold. Now, you can do the math yourself, but I can assure
you that demand will rise significantly over the years ahead.
In summary, we have a situation where new supply is tight and
demand is rising - classic recipe for a bull market."

He also notes that "a
new bull market has begun alright, but it isn't in stocks, bonds
or property - it is in the natural world of commodities. In 2001,
commodities (adjusted for inflation) were the cheapest they had
ever been in the history of capitalism! Agriculture (adjusted
for inflation) has never been cheaper in 200 years. Now, that's
what I call value! Agriculture may not appreciate instantly,
but you're not going to lose much even if you're wrong - that
is the beauty of buying value on the cheap. Adjusted for inflation,
this sector is now selling at a 90% discount compared to its
peak - a fabulous bargain, don't you think?" Yes, Mr. Saxena,
I DO think that!

As for bonds, he is less sanguine,
and notes that "Interest-rates are now rising all over the
world, so the ageing bond bull-market may be about to end. I
suggest selling your bonds during periods of strength."

How to sum this all up? Mr.
Saxena says "My advice - forget the short-term movements,
simply buy gold on the dips for the long haul."

- Doug Casey of the Energy
Speculator newsletter projects that "The world's use of
electricity is projected to increase by 66% from 13 trillion
kilowatt hours (KWH) in 1999 to 22 trillion KWH in 2020."

That is why he is pounding the table for uranium, notes that
demand for uranium already outstrips demand by 26%, and that
the deficit is "not going away anytime soon" because
uranium mines will have to double their current output, which
is pretty tough.

- If you are thinking that your house will protect you, guess
again. From Taipan newsletter we learn "The last time rising
interest rates collided with a real estate oversupply was in
1990. That year, the price of an average home fell around 10%
- and the price of upscale homes declined by 4% to 50%."

Their assessment of it is "This
means we're sitting under a black shadow of something about to
topple. Over $2.5 trillion in 'paper money' - the so-called wealth
created since 2001 by the rise in housing prices - will disappear."

Gary Schilling, of A. Gary
Schilling & Company, writes that "low end borrowers
are already in trouble as shown by the leaping delinquency rates
for the usually subprime FHA insured mortgages."

In that same vein, economist
Dean Baker, co-director of the Center for Economic and Policy
Research, believes that "when the bubble bursts, home prices
could fall 11% to 22% nationally, 30% to 50% in some markets.
That would result in home equity losses of between $1.2 and $5
trillion."

Kevin DeMeritt of goldcentral.com
hears all this, and asks "So when real estate inevitably
crashesdoes that necessarily mean investors will make another
jump, this time to gold? There may be little choice. Meanwhile,
investors will be watching wide-eyed as gold and silver thrives
on all the uncertainty."

- John Chalcraft of ProActive
Communications reminds us that "Investors are well aware
of the soaring price of commodities such as gold and oil, but
a fact going largely unnoticed in the investment community is
that over the past 3 years the price of molybdenum has risen
over 1000%."

- The way people are trading
in and out of the gold market reminds me of a saying by Rich
U., who solemnly intones "Greed, the silent killer."
If you are sitting on a profit and you sell, you have to pay
the taxes, commissions and fees, meaning you will have less money
when you get back in. If you are, instead, sitting on a gain
and you DON'T sell, then all that money is still there to make
more money when gold goes back up in price, which it will. Trading
is for chumps. Buy and hold is the way to play the coming long
bull market in gold. And as a big chump myself, I know what I
am talking about.

Ugh.

***Mogambo sez: Nothing has changed, except that I
am bored, as making money by buying and holding gold, silver
and oil is so unexciting. And it will be continue to be both
profitable and boring for a long, long time, too. So shut up
and deal. And send the kid out for another six-pack. And some
potato chips.

Richard Daughty
is general partner and C.O.O. for Smith Consultant Group, serving
the financial and medical communities, and the writer/publisher
of the Mogambo Guru economic newsletter, an avocational exercise
the better to heap disrespect on those who desperately deserve
it. The Mogambo Guru is quoted frequently in Barron's, The
Daily Reckoning
and other fine publications.